Copyright law can seem confusing. Business owners may know that copyright law prevents people from copying books and songs and the like, but beyond this copyright law can seem convoluted and difficult to understand. Copyright is also often confused with patent rights or trademark rights, but copyright law is unlike patent law and trademark law in many important respects. In fact, in many ways it is the most expansive type of intellectual property right, and its scope—and its limitations—may surprise you.1 Here are the five most important things every business owner must know about copyright law.
A central principle of copyright law is that it covers only original works of authorship and does not cover pure facts or ideas.2 For example, an original scientific article written about the Higgs boson particle3 would certainly be entitled to copyright protection, and any person who might copy that article would infringe the copyright in that article. Such an article would be an original work of authorship about the Higgs boson particle. On the other hand, no copyright exists in the Higgs boson particle itself or in the mere discovery of the particle. These are pure facts. Other scientists are free to write their own original books and articles about the Higgs boson particle.
Another example more closely related to a business may be useful. I am frequently approached by an entrepreneur who has come up with a new idea and wants to know if they can “copyright” it. For purposes of illustration, let us imagine an entrepreneur who has come up with the idea of selling third-party advertising on the pizza boxes of area pizza delivery services. He wants to secure the exclusive right from local pizza services to use their delivery boxes and then to sell spaces on those boxes to other area businesses. He is worried, however, about talking to the area pizza delivery services for fear that one or more of them will take his idea and begin selling advertising themselves. He wants to protect not merely what he puts on the pizza delivery boxes, but also the idea of putting an ad on a pizza delivery box.
Unfortunately, copyright law offers very little to help this potential business owner protect the idea itself. If he wrote down the idea in a business plan, he could prevent others from copying or distributing his plan or copying the ads he uses (assuming he owns the copyright in such ads), but he could not use copyright law to prevent another party from adopting his plan or from selling advertising on pizza delivery boxes. There may be other ways to consider protecting this entrepreneur’s new business plan, such as the use of confidentiality agreements, developing an exclusive network of advertisers, or creating and establishing a strong brand for the service, but copyright law will not protect the idea of placing third-party advertising on pizza delivery boxes.
Of course, the distinction is not always clear between an idea and an original work that copyright law will cover. One way copyright law attempts to exclude ideas from its reach is that it will protect a work only if it is fixed in a tangible medium of expression4. Indeed, this dichotomy between ideas and expression is an important starting point for understanding the scope of protection under copyright law, but we shall see that “expression” can have a broad meaning.
For example, since 19905, it is an infringement of the copyright in the design of an architectural work to construct a building copied from the original building. This will extend, however, only to “original” expression in the building. In other words, the common ideas expressed in a building, such as the use of a door or archway, cannot be protected in and of themselves. Understandably, however, it can be difficult to distinguish these commonly used elements in an architectural work (e.g., a round tower) from “original” design elements that would be protectable (e.g., the unique shape and configuration of a tower).6
Similarly, it could be argued that live radio, television and web broadcasts are simply ideas or facts because they are merely transmitting a live event or situation as it happens. In other words, like the Higgs boson particle in the example above, the transmission of a live event is nothing more than the “idea” of the event and cannot be protected. Under U.S. copyright law, however, we need not argue about these definitions because the law simply provides that such live broadcasts will be regarded as “fixed” so long as recordings of the broadcasts are made at the time of their original broadcast.7
What if the expression of a work is only temporary, such as displays on a computer screen? The audio-visual display generated by a computer program could fail to be regarded as “fixed” since it is presented only temporarily on the screen. Courts, however, have found that being “fixed” need not mean permanently “fixed.” Therefore, such temporary displays are sufficiently “fixed” to be covered by copyright protection.8
In short, a business owner should understand that copyright law will not generally protect their pure ideas, but it is nevertheless quite broad in scope that can cover a broad range of expression.
Copyright protection exists for a business’s original works the moment they are created.9 The owner of the copyright is not required to include a copyright notice10, need not register the copyright, and does not need to send to himself a copy through the mail in a sealed envelope, although using a notice and registering one’s copyright in a work can provide certain advantages. The important point to remember, however, is that protection arises automatically as soon as an original work of authorship is fixed in a tangible form of expression.
This is a two-edged sword, however. While this principle means that the works of a business owner are automatically protected without any further formalities, it also means that works of others are automatically protected without any further formalities. In other words, works of competitors and other third parties will be entitled to copyright protection even if there is no copyright notice, no registration, and no other indication that the other owner actually claims copyright protection. As a result, the fact that a work may not have any notice or other warning against copying does not mean that it is in the public domain or that there are no restrictions on copying it.
A few important caveats to this rule should be noted, however. First, copyright owners of U.S. works must register their copyright to file an infringement action involving such works.11 Second, the use of a copyright notice will in most cases prevent an infringer from arguing that his damages should be reduced because he was not aware that his or her actions infringed the work. Third, a valid registration can provide certain benefits to an owner in a legal action against a potential infringer, including a presumption that his or her copyright is valid and enforceable (if the registration was obtained within five years of publication), and the ability to record his or her copyright with U.S. Customs and Border Protection (CBP) so that CBP can seize goods at the border that infringe the owner’s copyright.12
Finally, business owners may hear about possibly establishing rights by mailing a copy of the work to oneself in a sealed envelope (also known as a “poor man’s copyright”). This practice, however, is not mentioned in U.S. copyright law and does nothing to establish or create any copyright protection. It is at most an attempt merely to establish a date (i.e., the postmark date) by which the work was created.13
In short, registration and notices can be useful (and may even be required to bring an infringement action), but copyright protection exists for a work automatically as soon as it is created.
Ownership of the copyright in a work is strictly governed by copyright law, which requires parties to follow certain rules if they want the initial owner to be different from the person set forth under copyright law. Like the rule that copyright in a work arises automatically, the initial author (or authors if jointly created by two or more persons) of the work will always be the first owner of the copyright in that work.14
This has several implications important to the business owner. Most importantly, it means that a business will own the copyright in the works created or used by that business only if it can show one of the following:
(1) that it is the sole author, or
(2) that it acquired the copyright from the author(s), or
(3) a combination of (1) and (2).
Therefore, before a business can be certain it owns the entire copyright in a work, it must first identify the author or authors of the work.
When we refer to an “author,” we generally mean an individual, i.e., the natural person who created the work. Therefore, determining authorship of a work may seem simple—we need only ask who contributed to its creation. It is important, however, to remember #1 above that copyright only protects original material fixed in a tangible means of expression. As a result, an author will be someone who did more than simply supply the idea for the work or gave general directions for the work.
To be an author, the individual must have been a creator of the fixed expression. Unlike the person who may have supplied the idea for the work or provided directions for the work, an author will be someone who converted an idea or directions into a fixed expression.15 For example, an architect will own the copyright in his drawings even if the business owner told the architect the type and style of building he wanted. On the other hand, merely transcribing what another dictates, without adding any intellectual input, does not make the transcriber an author.16 Similarly, paying for the creation of a work will not make the party paying for the work an author simply because he paid for the work.17
You may at this point be wondering how a business will own anything their employees and contractors might create. If only individuals are authors and only authors are the initial owners, how does a business ever acquire ownership? First, it is important to remember that there is a difference between being an author and being an owner of the copyright. Although the author will always be the “author” of the work and will be the first owner of the copyright, the owner need not always be the author. The author can transfer ownership to another party or ownership may pass by operation of law.
Second, there is one situation where a business can become an “author” even though it does not directly create works. Copyright law provides that a business will be deemed the author of a work, and therefore the initial owner of the copyright in the work, if the individual(s) who created the work fall into either one of two categories.
Category 1 consists of any employee of the business. Accordingly, an employer will be regarded as the author of the works of its individual employees so long as they are created within the scope of their employment.
Category 2 consists of any individual (e.g., a contractor) creating a work that is specially ordered or commissioned by the business, but only if certain additional conditions are met. More specifically, a business will be regarded as the author of works it specially orders or commissions only if all of the following additional conditions are met:
These works by individuals falling into either of these categories are known as “works made for hire”18 and generally these works will be the only exception to the principle that the author(s) of a work will be the actual individual(s) who create the work.19 Even in the case of works made for hire, however, it is important to determine the individuals who made the relevant contributions since their status as employees or contractors may be critical for determining whether their creations are considered works made for hire.
As a result of the foregoing, a business who wants to be the sole owner of the copyright in a work should use the following checklist to confirm that it is indeed the owner:
The important thing to remember is that confirmation of ownership must always begin with the individual(s) creating the work. Therefore, if there are intervening businesses in the process of creating a work, such as when a business retains another business to create a specific work (e.g., retaining a software development firm to produce custom software), the business commissioning the work will own the work only if the above checklist can be affirmatively completed for each step between it and each and every individual who contributed to the creation of the work.
For example, if we consider the case of a business retaining a software development firm to create custom software, the commissioning business may obtain an assignment of the copyright in the software from the software development firm, but that assignment will only convey ownership of the copyright to the extent that the development firm actually acquired such ownership. Therefore, if the development firm used non-employees to create the software or if any employees made contributions outside the scope of their employment, then the software development firm must confirm either: (1) that the works fall within one of the categories above and that such individual(s) agreed in writing that the works would be works made for hire, or (2) that the software development firm obtained a written assignment of ownership of the copyright from such individual(s). And if the software development firm engaged any other business to create the custom software or any part of that software, then in addition to confirming that the software development firm obtained an assignment of the copyright from such additional business, the above checklist must be affirmatively completed for the individuals in that other business who contributed to the creation of the software. And so on and so on until the commissioning business can trace ownership using the above checklist back to each individual who contributed to the work.
In short, copyright protection lasts a long time. Currently, copyright protection will exist for the life of the author plus 70 years following the author’s death.20 In the case of works created by more than one author, the additional 70 years does not begin to run until the death of the last surviving author.21 As a result, it will also be important to identify the individual authors of a work even if ownership is not an issue since the term of copyright protection will be determined based on the lives of those individual authors.
Of course, as explained above, the author of a work made for hire will not be the actual individual or individuals who created the work, but it will be the employer or commissioning party who is deemed the author. Therefore, in the case of a work made for hire (or if the work is an anonymous or pseudonymous work since the author is not known), copyright will exist for 95 years following the year the work is first published or 120 years following the year it is first created, whichever is shorter.22
The owner of the copyright in a work has the following exclusive rights:23
(1) The right to reproduce the work. This is the most commonly known right associated with copyright law, i.e., the right to make copies.
(2) The right to create works derived from the protected work. This right overlaps with the first right above and the fourth right below since basing a work on another work generally also involves copying or performing a work. Nevertheless, this right was important enough to make it a right on its own so as to makes it clear that the owner of the copyright in a work has the exclusive right to create such works as a translation of the work, a new musical arrangement, a dramatization of the work, or conversion of the work from one medium to another (e.g., making a movie from a book, at least to the extent the subsequent work is substantially similar). It is important to note, however, that the owner of the copyright in the pre-existing work does not acquire any rights in any original material that may be added in the derivative work unless it is also the author of the derivative work or acquires such ownership from its author. Therefore, a derivative work will often implicate the rights of multiple owners, i.e., the owner of the copyright in the pre-existing work as well as the owner of any original material added in the derivative work.
(3)The right to distribute copies of the work to the public. This right is distinct from the right to make copies and covers the distribution of copies to the public, whether by selling, renting, or lending such copies. There is an important limitation on this right, however, in that the owner controls only the initial transfer of a copy. The transferee is free to transfer that particular copy with further consent of the copyright owner. For example, a copyright owner has the exclusive right to sell a new copy of a book, but the person who buys that book may sell or further transfer his or her used copy of that book without need of permission of the copyright owner.24
(4) The right to perform the work publicly. This right applies to literary, musical, dramatic and choreographic works, pantomimes, and motion pictures and other audiovisual works. This right is most readily identifiable with respect to the music industry. Several organizations exist specifically dedicated to the collection of royalties for the performance of the music of their members, such as Broadcast Music, Inc. (BMI) or the American Society of Composers, Authors and Publishers (ASCAP). Many businesses each year learn about this performance right when they receive a demand from a performing rights organization such as BMI or ASCAP to pay royalties for playing music at their offices, retail shops, or other facilities.
(5) The right to display the work publicly. This right applies to literary, musical, dramatic and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work. For example, while the purchaser of a movie video may acquire the right to watch the movie in their home, the purchaser does not ordinarily acquire the right to play the movie at a local church, office party, business presentation, or other public gathering since this would violate the copyright owner’s exclusive right to display the work publicly.
(6) The right to perform the work publicly by means of a digital audio transmission. This right applies to sound recordings, which is notably omitted from the list of works covered under item (4) above. This right, therefore, is intended to extend the performance right at item (4) to the performance of sound recordings, at least to the extent performed by digital transmission. This right, however, should not be confused with right of the owner of the copyright in the underlying musical work, who has the broader exclusive right to perform the work publicly under item (4) above. Therefore, the digital transmission of a sound recording without permission would infringe both the right in the sound recording pursuant to this item (6) as well as the right in the underlying musical work pursuant to item (4) above, while an analog transmission would only infringe the performance right in the underlying musical work pursuant to item (4) above.
There are a variety of exceptions and limitations on these rights, the most frequently cited and well-known of which is “fair use.”25 Copyright law in general exists to ensure for the public welfare the benefits of the creative output of authors by enabling those authors to benefit, at least for some period of time, from their creative labor. Therefore, copyright law attempts to balance the provision of benefits for authors with the public benefit of access to creative output of these authors. “Fair use” refers to uses of a work that on balance tip in favor of the public benefit, and therefore the owner of copyright in a work will not be able to prevent a “fair use.”
For example, “fair use” includes uses for purposes such as criticism, comment, news reporting, teaching, scholarship, and research, at least if certain other factors apply. Copyright law sets out some of these factors to be used in determining whether a use is fair, such as whether the use is commercial or non-commercial, the nature of the work being used, the amount and substantiality of the work used, and the effect on the potential market for or value of the work. For most businesses, however, the most important point to remember is the fact that its use will often be commercial in nature and therefore will infrequently qualify as fair use.
Copyright law can often raise many difficult issues and involve principles that are quite complex. Nevertheless, a basic understanding of these five core principles will be essential to business owners who care about these valuable rights. By understanding these core principles, a business owner can operate in a way that maximizes protection for these potentially valuable assets as and when they are created. Addressing these issues at creation will be much easier and less costly than trying to address them after something has gone wrong or after the competition has begun using your business’s materials.
1 In this article, our reference to copyright law is to the U.S. Federal Copyright Law. U.S. Federal Copyright Law is the exclusive law applicable to works covered by that law. Although U.S. Federal Copyright Law covers the vast majority of works that arise for business owners, there are some limited types of works not covered by U.S. Federal Copyright Law that could be covered by laws of individual states. Because most works are now covered by U.S. Federal Copyright Law, however, the issue of the protection of works under the laws of individual states is much less of an issue for business owners.
2 See, e.g., Lotus Dev. Corp. v. Paperback Software Int'l, 740 F. Supp. 37 (D. Mass. 1990). See also 17 U.S.C. § 102(b).
3 A particle that physicists proposed to explain certain inconsistencies between predictions and theory in particle physics, but which was actually discovered recently by scientists at the Large Hadron Collider of the European Center for Nuclear Research (CERN) in Geneva.
4 17 U.S.C. § 201(a).
5 See the Architectural Works Protection Copyright Act of 1990, Pub. L. No. 101-650, 104 Stat. 5133 (1990) (codified in scattered sections of 17 U.S.C.).
6 See, e.g., Shine v. Childs, 382 F. Supp. 2d 602, 612 (S.D.N.Y. 2005) (the court analyzed various options for comparing the allegedly infringing building with the original building and identifying the original expression versus functional elements before deciding on its approach).
7 17 U.S.C. § 101.
8 See, e.g., Kramer Mfg. Co. v. Andrews, 783 F. 2d 421 (4th Cir. 1986) and Williams Electronics v. Artic International, 685 F. 2d 870 (3d Cir. 1982). Of course, there is a limit to how temporary a work may be and still be regarded as “fixed.” Purely ephemeral works, e.g., live performances of a play or song, are fleeting ordinarily not found to be sufficiently fixed for copyright protection in and of themselves.
9 See U.S. Copyright FAQ, “When is my work protected?”.
10 Although unexcused omission of a copyright notice could inject into the public domain works first published before March 1, 1989, the effective date of amendments made pursuant to the Berne Convention Implementation Act of 1988, Pub. L. No. 100-568, 102 Stat. 2853.
11 17 U.S.C. § 411(a). This rule, however, is not as straightforward as it sounds and several important issues involving this rule must be considered before filing an infringement action. For example, there are important exceptions to this rule, including actions based on works originating outside the U.S., actions based on works consisting of sounds, images, or both first fixed at the same time as their transmission, and actions to enforce an artist’s moral rights. Also, owners frequently do not consider registration of a work until after they have found that the work has been infringed. In such cases, the infringements may be ongoing and the owners do not want to wait for the Copyright Office to review their application before filing their legal action (although the Copyright Office does provide for an expedited application process for a higher fee). Fortunately, some U.S. Courts have held that the owner of the copyright need only file a complete application for copyright registration to file the lawsuit, but other courts have held that the owner must wait upon receipt of an actual registration. See, e.g., Estate of Edgerton v. UPI Holdings, Inc., 2010 U.S. Dist. LEXIS 66274 (D. Md. July 1, 2010) (discussing the split of authority on this issue) and the cases cited in this decision. On the other hand, even if an action for infringement is validly filed, certain statutory remedies may not be available unless the copyrights were registered. Therefore, although the basic rule requires owners of copyrights in U.S. works to register their works prior to filing an infringement action, these and related issues must be examined prior to filing an infringement action in consultation with an experienced copyright attorney to fully understand how it will impact any particular situation.
12 See “Working with CBP to Protect Your Rights”.
13 We do not recommend this practice, and it is not clear that an unopened letter delivered to oneself would be admissible in a legal action. There are more preferred ways of establishing a creation or first publication date.
14 17 U.S.C. § 201(a). For works created prior to January 1, 1978, different rules may apply.
15 See, e.g., S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir. Cal. 1989) (“To be an author, one must supply more than mere direction or ideas: one must ‘translate an idea into a fixed, tangible expression entitled to copyright protection.’” citation omitted).
16 See Kyjen Co. v. Vo-Toys, Inc., 223 F. Supp. 2d 1065, 1068 (C.D. Cal. 2002) (holding that “the creator of a work at another's direction, without contributing intellectual modification, is not an author.”)
17 See Baker v. Robert I. Lappin Charitable Found., 415 F. Supp. 2d 473 (S.D.N.Y. 2006).
18 17 U.S.C. § 101.
19 Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (U.S. 1989) (“As a general rule, the author is the party who actually creates the work, that is, the person who translates an idea into a fixed, tangible expression entitled to copyright protection.”).
20 17 U.S.C. § 302(a). This discussion applies for works created on or after January 1, 1978; works created prior to January 1, 1978 are subject to different rules.
21 17 U.S.C. § 302(b).
22 17 U.S.C. § 302(c).
23 17 U.S.C. § 106.
24 17 U.S.C. § 109. Often referred to as the “first-sale doctrine,” this limitation can become a complex issue in the modern environment of digital media. In addition, a recent U.S. Supreme Court decision clarifies that even a foreign sale will constitute a “first sale” for purposes of U.S. copyright law. The application of this doctrine in any particular situation will often require the careful analysis of a qualified copyright attorney.
25 17 U.S.C. § 107.